Here we are in the first week of March and there are a few things we are hearing our clients say over and over: When is winter going to end and what should we expect to see in the market?
The funny thing is, these questions are more related than one would think!
Trying to forecast when mother nature will release her grip and predict what we could see the markets do this year are equally difficult. Over and over we are hearing from clients that they expect a market correction. While they may have money in retirement accounts with market exposure and a portion of their portfolio in a safe money bucket through one of our Fixed Indexed Annuity strategies they still are asking, “what more can I do?” It is very clear to us that our clients are looking for safety but do not want to give up the growth potential the market has provided the last few months.
The team at Total Advisor has heard our clients and have a solution; it is a vehicle called an Indexed Universal Life Insurance Policy (IUL). Before you scoff at the idea lets remember what we have learned through our radio programs, seminars and personal meetings about annuities: “Saying you don’t like annuities is like saying you don’t like food, there is good food and there is bad food,” it is our job to make sure you are only being served the taste that satisfies your personal pallet. Being independent has allowed us to find several IUL strategies that benefit our clients in multiple exciting ways. Here are the basics:
An IUL is a life insurance policy, but when using it for retirement or college planning we design it different. The term “Indexed” refers to the crediting strategies. All of our IUL’s have a floor of 0%, this means that regardless of market performance, you NEVER go negative with the market, your account remains flat. There will be a “Cap” assigned to the policy, typically 10-15%. This means when the market goes up, you go up with it, up to your policy cap. For example; if you have a cap of 12.5% and the S&P 500 does 14% that year you get credited 12.5% interest to the cash value in your account. If the S&P does 6% that year you get all 6%. If the market corrects and we see a negative year of -20%, you remain with 0% interest credited, you do not go negative and when the market returns positive again you take off from where you left off. This crediting strategy is very exciting but the best part is yet to come…..as you accumulate cash value you are able to withdraw cash from the policy as a “loan” against the death benefit that will provide you tax free income as you need it. You never have to pay the loan back in the traditional loan payment sense, it is simply deducted from the death benefit when you pass away.
Whether you are 15 or 65 there is a strategy within this vehicle that we can help structure for you! Tax free income, no threat of losing your money, large upside potential and a death benefit for heirs…..now you can see why we are excited. Call or email your advisor today and we are happy to explain in more detail how you may benefit from an IUL and it’s potential to outperform your company 401k plan exponentially!